Guernsey has significantly reduced the set-up time for mono-line insurance cells in an effort to facilitate the growing demand for captive solutions.
The Guernsey Financial Services Commission (GFSC) introduced the preauthorisation for the creation of new cells within existing protected cell companies in December 2020. The pilot is expected to run until the end of 2021.
Artex was the first manager to complete a new cell formation under the scheme and Captive Intelligence understands several other managers are set to utilise the pilot in the coming months.
The Guernsey International Insurance Association (GIIA) contributed to the consultation with the GFSC to introduce the scheme.
“Because we’re coming out of this period where captives haven’t necessarily been flavour of the day, people are going through what is quite an educational process at the same time they start their renewal process,” Pete Child, head of European operations and managing director at Artex, said on GCP #45 in December.
“Quite often there was not sufficient time to be able to grasp what the captive concept meant, be able to allocate the finances and the time to set up a captive vehicle and then take advantage of that at renewal.”
Child said as a result often the client would run out of time and have to put off formation for 12 months or not complete at all.
“What we wanted was a solution that made the cell captive a fundamental and realistic alternative to the traditional, whole risk transfer renewal all the way up to as close to the renewal as possible,” he added.
The scheme is only open for protected cells within an existing PCC that is owned by a licensed insurance manager. Only cells that are writing a single line of insurance qualify.
“Insurance managers in Guernsey are licensed,” Child said. “Therefore if a manager was to go through this process and there were some unwanted ramifications then that insurance manager is putting the whole of its business in jeopardy, because the GFSC, if it chose to do so, could impose restrictions on its licence or remove its licence.”